House carves gas line funds out of budget

Panel cuts most of what Parnell requested to advance gas pipeline

Posted: Wednesday, March 10, 2010

By PAT FORGEY

Legislative opponents of Trans-Canada Corp.'s state-backed natural gas pipeline project stripped much of the money Gov. Sean Parnell has sought for the state's role in pushing it forward from the budget adopted by the House Finance Committee on Tuesday.

Finance Co-chair Mike Hawker, R-Anchorage, acknowledged that it was a "substantial reduction" but said money could be provided later and was not an attack on the pipeline.

Parnell said he would continue to seek the money that was cut.

House Democrats who had backed the Alaska Gasline Inducement Act under which Trans-Canada had won state support criticized the cuts as an attack on the gasline.

At a press conference Tuesday, House Minority Leader Beth Kerttula, D-Juneau, warned the Legislature could stall as pro-industry representatives attempt to reopen fights over gas pipeline and oil tax issues from the last few years.

"We're headed for some kind of meltdown," she said.

The money Parnell requested would have been used by the Departments of Law, Revenue and Natural Resources for the state's role in moving toward a Federal Energy Regulatory Commission certificate for the Alaska Pipeline Project. The project is sponsored by Trans-Canada with partner ExxonMobil under AGIA. A competing pipeline sponsored by ConocoPhillips and BP also is in the works.

Hawker denied anything "skulduggerous" was happening in an attempt to stop the Trans-Canada effort to which he had earlier opposed. He said the move was a reaction to Alaskans who have let him know they wanted more scrutiny on the issue.

Hawker said under the budget passed by the committee, the administration would receive 30 percent of what Parnell said was needed. It would receive the remainder when the Parnell administration shows that TransCanada successfully receives commitments to ship gas in an "open season" scheduled to begin May 1.

"I'm looking to balance this so the Legislature can't be accused of hamstringing or otherwise making it impossible for the AGIA process to continue forward," Hawker said.

Democrats said Hawker's test would be impossible to pass, because the open-season process was only the beginning of negotiations.

Rep. Les Gara said the "precedent agreement" that the budget called for was impossible to meet. Such an agreement is an unconditional bid to ship gas, while experts who have testified to the Legislature said to expect conditional bids as a way to begin negotiations.

"There's going to be no precedent agreement; we all know that," Gara said.

Gara warned that withholding the money sought by Parnell could delay the state's ability to meet its commitments under AGIA and could weaken the state's hand in forcing BP, ConocoPhillips and ExxonMobil to develop a pipeline.

"They're not going to move ahead with a gas line on their own. We have to push them," Gara said.

Other lawmakers joined Hawker in saying Parnell needed to do a better job of explaining his funding requests.

Hawker defended the state's oil producers.

"You stated the intent of the industry in going forward was to shortchange the Alaska people," Hawker told Gara.

"Respectfully, that's a perjurative I would like to acknowledge that I don't believe that was an appropriate statement."

The Finance Committee also cut money for the Parnell administration to work on an in-state gas line to Southcentral after Hawker questioned "the commitment of this administration in moving this project forward."

Other legislative bills would take responsibility for in-state gas away from Parnell, and vest it elsewhere.

"Gas pipeline funding, both for the in-state gasline and AGIA pipeline work, remains a priority for this administration and we will continue to work with both the House and Senate to restore full funding," said Sharon Leighow, Parnell's spokesperson.

Hawker said none of the cuts were in opposition to AGIA or in-state gas, but were instead a way to continue the discussion with the Parnell administration.